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Court seeks answers on sale discount

Leonie Wood

TWO insolvency specialists, Mark Mentha and Mark Korda of KordaMentha, have been called to explain in court why they sold a property at a steep discount.

Mr Mentha, who initially answered questions about the sale during a liquidator's examination in 2008, is being sued in the Victorian Supreme Court for allegedly breaching his duty by selling the 16-hectare site where the former Bradmill Undare textile group operated for $7 million.

Now Mr Korda and a colleague, Mark Ryan, will be called to a liquidator's examination in the Federal Court this month to explain what they know about how the sale was negotiated.

When it sold in April 2002 Mr Mentha was the receiver and manager appointed by the ANZ Bank to recover debts owed by the denim manufacturer.

He agreed to sell the business and land, owned by a subsidiary Redcastle Estate, to Melbourne businessman Colin DeLutis.

In 2007 Redcastle was put into liquidation by its shareholders, the Frazer family, and in 2008 the Redcastle liquidator, Wayne Lamb, filed a writ against Mr Mentha seeking damages.

Mr Lamb has alleged that Mr Mentha sold the land for $7 million when it and the buildings had a market value of ''not less than $13.2 million''.

In his defence filed in the Supreme Court, Mr Mentha denies wrongdoing, saying he acted honestly and in good faith.

He has told the court that at the time of the sale Mr DeLutis, the sole prospective buyer, had insisted he would not buy the denim business unless he could also buy the land. As well, the business was incurring large losses, and if the sale had fallen through and employees were made redundant it would have crystallised further liabilities of $11 million, Mr Mentha said.

He told the 2008 examination that he was not involved in finalising the sale after April 24, 2002.

In the Federal Court yesterday, Justice Alan Goldberg cleared the way for Mr Lamb to ask questions of Mr Korda and Mr Ryan, saying the liquidator was ''seeking to fill in the gap'' about the sale negotiations. But he indicated the liquidator could not make it a ''dress rehearsal'' for the Supreme Court case.